Nov 5 • 📊 Industry Analysis
Switching to gas reduces emissions in short term but increases in long run
Sharing the key points of a Financial Times article below.
Link to the original article: https://www.ft.com/content/e969af59-0b97-4b21-942d-704bdbca667e
Natural gas has been considered a bridge fuel in the fight against climate change because it produces about half the carbon emissions of coal when burned for energy.
Many countries, including those in Europe, have planned to increase their use of gas with the idea that it will help reduce emissions while we build up renewable energy sources like wind and solar. This logic seems straightforward: if we need energy now and can't instantly switch everything to renewables, using gas instead of coal should at least cut our emissions in half in the meantime.
However, research reveals what experts call "the gas trap," which shows this strategy backfires in the long run. When countries increase gas production to replace coal, it drives down overall energy prices, which makes investing in renewable energy less attractive and profitable. So while gas does reduce emissions in the short term by pushing out coal, it actually leads to higher total emissions over time because it discourages the renewable energy investments we need.
The study found that if a country like Norway could commit in advance to producing less gas, it would reduce gas production by 10 % to encourage renewable investment. But without that commitment, countries end up increasing gas production by about 9 % instead, ultimately replacing renewables rather than coal.
Norway is primarily a gas producer and exporter - it sells natural gas to other European countries. The article is about how much gas Norway (and other producers) choose to produce and export, and how that affects what happens in the countries that use that gas.
Norway's role: Produces natural gas and exports it to Europe.
Europe's role: Buys and uses that gas (burning it for electricity and heating), choosing between gas, coal, and renewables.
The trap works like this: When Norway produces and exports more gas, it floods the European market with cheap gas. European countries then use this abundant, cheap gas instead of coal (good in the short term). But the cheap gas also makes renewable energy projects in Europe less profitable to build, so fewer get built. Eventually, the gas ends up replacing what would have been renewable energy, not just coal.
The solution involves either increasing direct investment in renewables, regulating gas exploration, or limiting gas transport infrastructure to ensure that renewable energy remains a worthwhile investment.
The article is fundamentally about production decisions by gas-producing countries like Norway and how those decisions affect consumption choices in the countries buying that gas. Norway doesn't necessarily burn all its own gas; it's selling it to others, but its production levels influence the entire European energy market and investment landscape.
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Switching to gas reduces emissions in short term but increases in long run
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